AUG   ^vjiyi^ 


An  Outline  of  the  Development 


OF  THE 


Internal  Commerce  of  the  United  States 


1789-1900 


By  T,  W.  VAN  METRE 


Thesis  presented  to  the  Faculty  of  the  Graduate  School 
of  the  University  of  Pennsylvania  in  partial 
fulfilment  of  the  requirements  for 
the  degree  of  Ph.D. 


BALTIMORE 

WILLIAIVIS  &  WILKINS  GO. 

1913 


AN  OUTLINE  OF  THE  DEVELOPMENT  OF  THE 

INTERNAL   COMMERCE   OF  THE 

UNITED  STATES,  1789-19001 


1789-1830 

At  the  beginning  of  the  national  era  the  internal  commerce  of  the 
United  States  gave  small  promise  of  the  tremendous  development 
it  was  to  undergo  during  the  ensuing  century.  There  was  as  yet 
too  little  differentiation  of  occupation  to  give  rise  to  a  large  interstate 
trade  in  native  products,  and  the  proximity  of  the  greater  part  of 
the  population  to  the  seacoast  made  it  cheaper  and  more  convenient 
to  carry  on  the  small  interstate  trade  that  did  exist  by  means  of 
small  sailing  vessels  plying  along  the  coast.  Practically  all  the  in- 
ternal trade  was  devoted  to  bringing  the  surplus  agricultural  produce 
of  the  interior  to  the  seaport  towns  where  it  was  exchanged  for  im- 
ported wares  that  could  not  be  produced  by  the  inhabitants  of  the 
inland  region. 

As  is  usual  in  a  new  country,  the  settlers  who  had  first  pushed 
into  the  interior  had  founded  their  new  homes  close  to  the  rivers, 
and  these  natural  highways  had  always  been  and  still  were  the  most 
important  means  of  transportation  to  and  from  the  seacoast.  At 
the  mouths  of  the  larger  streams  flowing  into  the  Atlantic  Ocean  were 
to  be  found  large  and  wealthy  cities,  where  enterprising  men  were 
laying  the  foundations  of  large  fortunes  in  a  rapidly  growing  trade 
in  the  agricultural  and  forest  products  floated  down  from  the  interior. 

^  In  this  paper,  which  is  a  brief  abstract  of  a  work  to  be  published  later, 
an  attempt  is  made  to  outline  the  history  of  the  development  of  the  internal 
commerce  of  the  United  States  after  the  formation  of  the  Union  in  1789.  The 
term  "internal  commerce,"  though  in  its  fullest  signification  embracing  every 
purchase,  sale,  and  exchange  of  commodities  between  the  individuals  of  a 
country  together  with  the  business  of  transmitting  intelligence  and  of  trans- 
porting persons  and  things  from  place  to  place,  is  here  used  primarily  as 
applying  to  the  interchanges  of  commodities  among  the  various  sections 
of  the  United  States  carried  on  over  interior  lines  of  transportation — the 
rivers,  highways,  canals,  lakes  and  railroads. 

1 


263982 


2//    ,     ]'   -INTERNAL   COMMERCE  OP  THE  UNITED   STATES 

Living  close  along  the  ocean  where  numerous  excellent  harbors 
and  long  stretches  of  sheltered  water  gave  ample  facilities  for  the 
little  inter-colonial  trade  that  existed,  and  where  rivers  afforded 
natural  means  of  transportation  from  the  interior  to  towns  on  the 
coast,  the  people  of  early  colonial  days  had  not  found  it  necessary 
to  give  much  time  to  the  construction  of  roads.  The  gradual  inland 
movement  of  the  population  had  finally  compelled  them,  however, 
to  give  some  attention  to  the  means  of  land  transportation  and  many 
rude  earth  roads  were  built  to  replace  the  old  Indian  trails.  These 
roads  were  unspeakably  poor,  sloughs  of  mire  during  the  thaws  of 
winter  and  spring  and  thick  with  dust  in  the  summer,  but  bad  as 
they  were  they  carried  considerable  traffic  and  their  use  was  constantly 
growing.  Inland  towns  were  beginning  to  grow  up  at  the  focusing 
points  of  the  country  roads,  and  the  owners  of  general  stores  at  such 
places  derived  large  profits  out  of  their  position  as  middlemen  be- 
tween the  farmers  of  the  interior  and  the  merchants  at  the  nearest 
seaports.  Three  great  roads  had  been  built  into  the  western  country, 
one  up  the  Mohawk  Valley  into  western  New  York,  and  two  across 
the  Alleghany  Mountains,  the  Pennsylvania  Road  from  Philadelphia 
to  Pittsburgh,  and  the  Wilderness  Road  over  which  the  early  settlers 
of  Kentucky  had  threaded  their  way  up  the  Shenandoah  Valley  and 
through  Cumberland  Gap  to  the  southern  banks  of  the  Ohio  River. 

The  transportation  facilities  of  the  times  were,  however,  entirely 
inadequate  to  the  needs  of  the  country,  and  the  lack  of  better  means 
of  getting  products  to  market  was  a  serious  impediment  to  internal 
development.  Tench  Coxe  wrote  in  1792:  "To  a  nation  inhabiting 
a  great  continent  not  yet  traversed  by  artificial  roads  and  canals, 
the  rivers  of  which  above  their  natural  navigation  have  hitherto  been 
very  little  improved,  many  of  whose  people  are  at  this  moment 
closely  settled  upon  lands,  which  actually  sink  from  one-fifth  to  one- 
half  of  the  value  of  their  crops  in  the  mere  charges  of  transporting 
them  to  seaport  towns,  and  others,  of  whose  inhabitants  cannot  at 
present  send  their  produce  to  a  seaport  for  its  whole  value,  a  thorough 
sense  of  the  truth  of  the  position  is  a  matter  of  unequalled  magnitude  and 
importance. " 

Especially  was  communication  between  the  Ohio  Valley  and  the 
outside  world  difficult  and  expensive.  The  natural  outlet  for  the 
surplus  of  this  valley  was  the  Mississippi  River.  During  the  Revolu- 
tionary War,  the  Spanish  government  had  given  the  people  of  the 
colonies  the  right  of  free  navigation  of  the  river  and  a  brisk  trade  had 


INTERNAL  COMMERCE   OF  THE   UNITED   STATES  3 

sprung  up  between  the  western  settlements  and  New  Orleans,  but 
in  1784  Spain  had  put  an  end  to  this  trade  by  withdrawing  the  right 
of  free  navigation.  The  people  of  the  West,  enraged  at  being  deprived 
of  what  they  considered  their  natural  right,  protested  furiously  and 
appealed  to  Congress  for  protection,  but  their  appeals  were  unavailing 
and  the  river  remained  closed  for  more  than  a  decade.  The  only 
market  left  to  the  western  farmers  was  the  cities  on  the  eastern  coast. 
Peltry,  ginseng  and  whiskey  were  almost  the  only  products  that  would 
pay  their  cost  of  transportation  to  Philadelphia,  and  the  proceeds 
derived  from  the  sale  of  these  were  sufficient  to  purchase  only  a  few 
things  of  prime  necessity  such  as  salt,  gunpowder,  and  some  indis- 
pensable articles  of  iron.  Even  this  small  trade  of  the  West  was 
crippled  when  the  new  government  placed  an  excise  tax  on  whiskey, 
and  the  resentment  felt  against  the  federal  authorities  for  their 
apparent  disregard  of  the  economic  interests  of  the  western  people 
blazed  forth  in  open  rebellion. 

The  commercial  isolation  of  the  Ohio  Valley  ended,  however,  in 
1795,  when  the  national  government,  spurred  to  action  by  the  threats 
of  secession  and  clamor  for  protection  coming  from  the  western 
farmers,  secured  a  treaty  with  Spain  opening  the  Mississippi  River 
to  navigation.  The  successful  conclusion  of  the  negotiations  was 
hailed  with  great  rejoicing  in  Tennessee,  Kentucky,  Pennsylvania 
and  Ohio.  Fleets  of  flat-boats  loaded  with  tobacco,  pork,  flour, 
grain  and  whiskey  began  to  move  down  the  river.  In  1799,  more 
than  a  million  dollars  worth  of  goods  were  received  at  New  Orleans 
from  the  country  up  the  Mississippi.  In  October,  1802,  the  Spanish 
Intendant  at  New  Orleans,  acting  on  his  own  responsibility,  suddenly 
withdrew  the  "right  of  deposit"  at  the  city,  and  contrary  to  the  pro- 
visions of  the  treaty,  he  refused  to  assign  an  equivalent  establishment 
at  any  other  place  on  the  banks  of  the  river.  The  western  people 
were  wild  with  rage.  It  was  necessary  to  send  troops  to  Kentucky 
to  prevent  an  armed  expedition  against  the  Spanish  province.  For- 
tunately, the  Spanish  government  disavowed  the  action  of  the  Intend- 
ant and  in  April,  1803,  the  river  trade  was  again  restored.  Desirous 
of  avoiding  such  difficulties  in  the  future,  Jefferson  pushed  the  nego- 
tiations already  begun  with  Napoleon,  to  whom  Spain  had  ceded 
her  claims  to  Louisiana,  for  the  purchase  of  New  Orleans  and  the  terri- 
tory through  which  the  river  flowed  from  the  possessions  of  the  United 
States  to  the  Gulf  of  Mexico.  The  negotiations  ended  in  October, 
1803,  with  a  wholly  unexpected  result — the  purchase  of  the  entire 


4  INTERNAL   COMMERCE  OF  THE  UNITED   STATES 

LouisiaDa  province.  In  December,  the  United  States  took  possession 
of  the  newly  acquired  territory  and  the  undisputed  control  of  the 
Mississippi  was  secured  forever. 

The  opening  of  the  Mississippi  marked  the  beginning  of  an  active 
internal  commerce  within  the  United  States.  The  farmers  of  the 
Ohio  Valley,  which  was  now  being  rapidly  settled,  found  an  outlet 
for  their  heavy  agricultural  produce,  and  consequently  secured  a 
purchasing  power,  enabling  them  to  buy  manufactured  goods  and 
merchandise,  which,  notwithstanding  the  distance  and  the  inferior 
roads,  could  be  carried  to  them  in  wagons  from  the  East.  Though 
the  produce  of  the  western  farmers  was  shipped  down  the  Mississippi, 
very  few  of  their  supplies  were  brought  up  the  river,  because  of  the 
difficulty  of  urging  a  flat-boat  against  the  powerful  current  of  the 
stream.  This  triangular  trade  of  the  Ohio  Valley  grew  rapidly. 
The  receipts  at  New  Orleans,  in  1807,  including  the  cotton,  sugar  and 
molasses  of  Louisiana,  which  made  up  a  third  of  the  total,  amounted 
to  $5,370,555.  The  money  for  which  the  products  of  the  West  were 
exchanged  at  New  Orleans  was  almost  invariably  spent  for  manu- 
factured and  imported  wares  from  eastern  cities.  Large  Conestoga 
freighters  made  regular  trips  from  Philadelphia  to  Pittsburgh  bringing 
loads  of  hats,  boots,  powder,  lead  and  clothing  which  were  distributed 
from  the  "Gateway  of  the  West"  among  the  towns  and  villages 
down  the  river.  Baltimore  and  New  York  also  shared  in  the  western 
trade. 

The  internal  commerce  of  the  country  in  1810,  as  in  1790,  was 
greatly  handicapped  by  the  high  costs  of  transportation.  Taking 
the  country  over,  the  charges  for  transporting  merchandise  were  $10 
per  ton  per  100  miles  and  articles  that  could  not  stand  this  rate  were 
shut  from  market.  Grain  and  flour  could  not  bear  transportation 
by  wagon  more  than  150  miles.  The  lack  of  commercial  intercourse 
caused  many  sections  to  develop  local  economic  and  political  interests 
which  endangered  the  unity  of  the  nation.  "The  question  of  the 
hour  was  plainly  how  to  counteract  this  tendency  by  a  system  of 
interstate  commerce  which  should  unite  them  by  a  firm  bond  of 
self  interest."^  Gallatin's  report  on  internal  improvements  in  1808 
reflects  the  plans  and  ambitions  that  were  in  the  minds  of  the  com- 
mercial and  political  leaders  of  the  country,  but  unfortunately  the 
foreign  controversies  in  which  the  United  States  became  involved 
at  that  time  prevented  any  attempt  to  carry  out  his  proposals. 

» J.  B.  McMaster,  A  History  of  the  People  of  the  United  States,  vol.  iii,  p.  465. 


INTERNAL   COMMERCE   OP  THE  UNITED   STATES  5 

The  war  of  1812  brought  a  period  of  unsettled  commercial  condi- 
tions. Domestic  industry  and  trade  were  stimulated  for  a  time, 
but  a  sharp  financial  panic  in  1814  caused  a  year  of  general  depression. 
The  return  of  peace  early  in  1815  was  followed  by  a  quick  revival  of 
business,  and  the  next  three  years  brought  an  era  of  prosperity  to 
nearly  everyone  except  the  manufacturers  along  the  eastern  coast, 
many  of  whom  were  ruined  on  account  of  a  deluge  of  importations 
from  Europe. 

Immigration  to  the  West  set  in  with  renewed  vigor  after  the  close  of 
the  war.  The  fertile  soil  of  the  Ohio  Valley  contributed  an  enormous 
product  of  grain,  tobacco,  fruit  and  hemp  which  continued  to  find 
an  outlet  down  the  Mississippi,  and  the  farmers  increased  their 
purchases  of  imports  which  flowed  into  Pittsburgh  from  the  East. 
In  1811  Fulton^s  invention  was  introduced  in  western  waters,  and 
in  1817  the  first  steamboat  voyage  was  made  from  New  Orleans  to 
Louisville.  The  effect  of  this  new  engine  of  commerce  on  the  Missis- 
sippi trade  was  almost  magical.  In  1818-19,  the  first  year  after  the 
steamboat  became  an  assured  success,  the  receipts  at  New  Orleans 
rose  to  136,300  tons,  valued  at  $16,778,000,  and  the  volume  of  exports 
of  domestic  products  from  the  southern  port  was  greater  than  that 
from  any  other  port  of  the  country. 

But  even  more  important  to  the  commercial  prosperity  of  the  West 
than  the  introduction  of  the  steamboat  was  the  spread  of  cotton 
culture  into  the  Southern  States  west  of  the  Appalachian  highland. 
Cotton  culture  had  been  found  exceedingly  profitable  in  Georgia  and 
South  Carolina,  and  when  it  was  discovered  that  the  rich  bottom 
lands  of  Alabama,  Mississippi  and  Louisiana  produced  even  better 
cotton  than  the  upland  districts  of  South  Carolina,  there  was  a  rush 
of  settlers  to  the  river  valleys  of  the  new  region.  In  1811,  fifteen- 
sixteenths  of  the  cotton  raised  in  the  United  States  was  grown  in 
Virginia,  North  Carolina,  South  Carolina,  and  Georgia;  in  1820, 
one-third  of  the  total  crop  of  600,000  bales  was  raised  in  Alabama, 
Louisiana,  Mississippi  and  Tennessee.  In  the  western  part  of  the 
cotton  belt,  as  in  the  eastern,  the  planters  directed  practically  all 
their  capital  and  labor  to  the  production  of  cotton,  relying  on  the 
region  north  of  them  for  provisions  and  live  stock.  The  market  for 
the  grain,  pork  and  flour  of  the  Ohio  Valley  was  greatly  enlarged. 
Flat-boat  men  disposed  of  their  cargoes  of  food  products  at  the 
wharves  of  the  plantations  along  the  Mississippi  River;  flat-boat 
stores  peddled  clothing,  boots  and  shoes,  household  furniture  and 


6  INTERNAL   COMMERCE   OP  THE  UNITED   STATES 

agricultural  implements  from  village  to  village  and  from  plantation 
to  plantation;  great  droves  of  horses  and  mules  were  driven  into  the 
Southern  States  in  response  to  the  demand  for  draught  animals  for 
use  in  the  cultivation  of  cotton. 

As  the  western  farmers  enlarged  the  volume  of  their  sales  to  the 
southern  planters  they  increased  their  purchases  from  eastern  mer- 
chants. A  large  part  of  the  foreign  imports  of  the  United  States, 
which  in  1816  reached  the  unprecedented  amount  of  $155,000,000, 
was  sold  in  the  West.  Attracted  by  the  cheapness  of  the  goods 
offered  and  full  of  confidence  in  their  ability  to  meet  all  debts  with 
the  proceeds  of  the  lucrative  southern  trade,  the  people  indulged  in 
extravagant  overtrading.  Purchases  far  exceeded  sales  and  the 
specie  coming  from  the  South  was  drained  away  as  fast  as  it  was 
received,  but  dozens  of  banks  furnished  a  supply  of  currency  by 
means  of  copious  issues  of  paper  money,  and  the  career  of  extrava- 
gance proceeded.  The  internal  trade  of  the  country  had  never  been 
so  prosperous. 

The  era  of  good  times  came  to  a  sudden  end  in  1819  when  the  nation 
was  visited  by  a  disastrous  money  panic.  Nearly  all  the  specie  had 
been  shipped  abroad,  and  large  sums  of  paper  money  had  been  issued, 
much  of  it  on  credit  of  a  questionable  nature.  The  general  com- 
mercial expansion  following  the  war  had  led  to  extensive  speculation 
all  over  the  country.  When  the  new  United  States  Bank  suddenly 
began  a  vicious  and  relentless  campaign  against  all  other  banks  of 
issue  in  an  ill-advised  effort  to  force  them  immediately  to  a  specie 
basis,  loans  were  called  in  everjrwhere,  the  circulation  was  greatly 
contracted,  prices  fell,  manufacturers  and  merchants  were  unable  to 
meet  their  obligations,  factories  shut  down,  mercantile  firms  went 
into  bankruptcy,  banks  closed  their  doors,  and  business  everywhere 
was  completely  prostrated.  To  make  matters  worse,  the  export 
price  of  the  great  "money  crop,"  cotton,  fell  from  32  cents  in  1818 
to  17J  cents  in  1820.  The  provision  market  of  the  western  farmers 
was  greatly  injured  and  thus  planter,  farmer,  merchant,  manufacturer 
and  banker  all  succumbed  before  the  general  catastrophe. 

The  panic  gave  a  sharp  check  to  extravagance  and  speculation, 
importations  declined,  prices  were  readjusted  and  business  soon  began 
to  recover.  By  1823,  the  country  seemed  to  have  been  restored 
to  its  former  prosperous  state  and  manufacturing  in  particular  was 
more  active  than  it  had  been  at  any  time  since  the  war. 

Notwithstanding  the  revival  of  manufacturing  and  domestic  trade, 


INTERNAL   COMMERCE   OF  THE   UNITED   STATES  7 

the  farmers  of  the  grain  states  found  themselves  in  distressing  circum- 
stances. The  Ohio  Valley  was  yielding  a  product  far  in  excess  of  the 
demands  that  existed  and  each  year  found  a  large  amount  of  unmar- 
ketable grain  left  in  the  fields  and  granaries.  Many  foreign  nations 
refused  admittance  to  American  food  products  and  though  the  grain- 
growing  capacity  of  the  United  States  had  increased  sixfold  since 
1790,  the  annual  exports  of  grain,  meat  and  flour  were  but  little  more 
than  the  average  for  the  five  years  from  1790  to  1795.  The  planta- 
tions of  the  South  were  drawing  much  of  their  subsistence  from  the 
northern  farms,  but  they  were  unable  to  absorb  more  than  a  small 
fraction  of  the  tremendous  surplus  that  was  seeking  a  market. 

Agricultural  interests  sought  urgently  for  relief.  Since  there  was 
no  foreign  market  for  their  surplus,  they  resolved  to  create  a  home 
market.  If  England  would  not  buy  food  products  from  the  United 
States,  the  United  States  must  refuse  to  buy  manufactures  from  Eng- 
land, and  must,  by  the  establishment  of  manufacturing  industries  at 
home,  give  rise  to  a  non-agricultural  population  that  would  consume 
the  redundant  supplies  of  meat  and  grain.  The  problem  of  attract- 
ing capital  to  manufacturing  enterprises,  the  farmers  proposed  to 
solve  by  the  creation  of  a  system  of  protective  tariffs  that  would 
check  importations  and  encourage  investment  in  mills  and  factories 
at  home.  Manufacturing  industries  already  in  existence  were  in  no 
apparent  need  of  protection  and  the  shipping  interests  of  Boston  and 
New  York  and  the  cotton  planters  of  the  South  strenuously  opposed 
the  protective  policy.  But  the  agricultural  interests  were  not  to  be 
denied.  Under  the  leadership  of  Henry  Clay,  the  tariff  of  1824  was 
enacted  and  the  ''American  System"  was  inaugurated.  In  1828, 
in  response  to  an  appeal,  emanating  from  the  woolen  manufacturers 
and  seconded  by  the  agricultural  interests,  still  further  encouragement 
was  given  to  home  manufactures. 

While  the  country  was  being  agitated  by  the  tariff  controversy  and 
exceptionally  bitter  political  contests,  the  New  York  canals  were 
opened  for  traffic  throughout  their  entire  length  (October,  1825). 
No  other  single  work  in  the  United  States  has  ever  had  a  more 
beneficial  effect  on  the  prosperity  of  internal  trade.  The  opening  of 
the  canals  brought  to  an  end  what  had  been  the  bane  of  internal  com- 
merce for  half  a  century — the  excessive  cost  of  freight  transportation. 
Freight  rates  between  Albany  and  Buffalo  were  at  once  reduced  90 
per  cent  and  the  day  of  the  freighter  on  the  Genesee  road  was  ended. 
The  new  canal  wrought  a  complete  change  in  all  the  rural  districts  of 


8  INTERNAL   COMMERCE   OF  THE   UNITED   STATES 

western  New  York.     Lumber,  staves,  ashes,  grain  and  vegetables, 
hitherto  unmarketable,  were  now  shipped  to  the  markets  of  the  East; 
farm  values  doubled  and  quadrupled ;  a  stream  of  people  poured  into 
the  fertile  farming  regions  around  Lake  Erie.     Not  less  valuable 
was  the  new  waterway  to  the  district  at  its  eastern  terminus.     The 
laboring  population  of  the  growing  manufacturing  towns  reaped 
immense  benefits  from  the  cheaper  and  better  means  of  subsistence 
they  could  now  secure,  while  the  shipments  of  merchandise  westward 
on  the  canal  exceeded  in  value  the  receipts  of  raw  produce  at  tide- 
water.    New  York  had  achieved  economic  unity  at  a  single  stroke. 
The  success  of  the  Erie  Canal  and  the  rapid  growth  of  internal  trade 
which  followed  the  adoption  of  the  "American  System"  caused  a 
demand  everywhere  for  more  roads  and  canals  and  a  widespread 
agitation  in  favor  of  government  aid  to  internal  improvements.     The 
federal  government  gave  extensive  aid  to  private  and  state  enter- 
prises in  the  way  of  land  grants  and  stock  subscriptions,  though  it 
did  not  engage  directly  in  the  construction  of  commercial  highways. 
The  individual  states  embarked  in  schemes  of  canal  and  turnpike 
building  which  involved  them  in  debts  of  millions  of  dollars.     Ohio 
and  Indiana  began  to  construct  canals  joining  the  Ohio  River  to 
Lake  Erie  in  order  to  secure  the  advantage  of  the  new  outlet  to  the 
East.     Pennsylvania,  awakened  to  the  danger  of  the  total  loss  of 
western  trade  through  the  state  by  the  fact  that  shipments  of  mer- 
chandise to  the  West  were  abandoning  the  wagon  roads  from  Phila- 
delphia, Baltimore,  and  New  York  in  favor  of  the  cheaper  route  by 
way  of  the  Erie  Canal,  began,  in  1826,  an  extensive  system  of  canals 
to  connect  the  Delaware  River  with  the  Ohio  River  and  the  Great 
Lakes.     Not  to  be  outdone  by  their  rival  states,  Maryland  and  Vir- 
ginia agreed  upon  the  construction  of  a  canal  from  Chesapeake  Bay  to 
the  Ohio  River,  and  on  July  4,  1828,  President  Adams  dug  the  first 
spadeful  of  earth  to  signalize  the  beginning  of  the  undertaking.     Some 
financiers  of  Baltimore,  dubious  of  the  success  of  an  effort  to  build  a 
waterway  over  the  difficult  route  adopted  by  the  promoters  of  the 
Chesapeake  and  Ohio  Canal,  withdrew  their  support  from  that  enter- 
prise,  and  putting  their  confidence  in  a  new  and  almost  untried 
transportation  device,  which  they  believed  would  prove  superior  to 
canals,  just  as  canals  had  proved  superior  to  turnpikes,  they  boldly 
inaugurated  the  plan  of  a  railroad  from  their  city  across  the  moun- 
tains to  the  Ohio,  and  Charles  Carroll,  of  Carrollton,  placed  the  stone 
that  commemorated  the  beginning  of  its  construction  on  the  same  day 


INTERNAL   COMMERCE   OF  THE   UNITED   STATES  9 

that  President  Adams  officiated  at  the  rival  celebration  that  marked 
the  beginning  of  the  canal. 

Thus  by  1830,  the  future  of  the  internal  commerce  of  the  United 
States  was  assured.  The  adoption  of  the  '*  American  System"  could 
have  but^  one  result — a  tremendous  expansion  of  domestic  trade. 
That  this  expansion  had  already  commenced  was  evident  from  the 
fact  that  notwithstanding  the  vast  growth  in  wealth  and  population 
from  1820  to  1830,  the  imports  of  the  United  States  had  exhibited  but 
little  increase.  ''The  nation  was  building  an  empire  of  its  own  with 
sections  which  took  the  place  of  kingdoms."^  New  England,  New 
York  and  Pennsylvania  were  manufacturing  the  clothing  and  iron 
utensils  for  the  West  and  South.  The  people  of  the  South  were 
absorbed  in  cotton  raising.  They  relied  upon  the  West  for  much  of 
their  food  and  live  stock;  they  bought  their  clothing  and  machinery 
from  the  North  Atlantic  States;  and  their  exports  brought  in  the 
specie  which  facilitated  the  commerce  of  all  sections.  The  West 
was  becoming  a  vast  granary.  Its  new  factories  were  drawing  arti- 
sans from  the  East  and  taking  laborers  from  the  country  to  swell  the 
demand  for  flour  and  grain  that  had  recently  been  seeking  in  vain  for 
a  market.  The  volume  of  shipments  of  food  and  merchandise  down 
the  Mississippi  was  larger  than  ever  and  the  manufacturing  popula- 
tion of  the  East,  already  too  large  to  be  fed  by  the  agricultural  produce 
of  New  England,  New  York  and  Pennsylvania,  was  beginning  to  draw 
subsistence  from  the  western  farms. 

Means  of  cheap  transportation,  the  lack  of  which  had  been  so  great 
an  obstacle  to  internal  development,  had  been  or  were  being  supplied 
to  meet  the  requirements  of  the  new  conditions.  The  steamboat 
arrivals  at  New  Orleans  numbered  a  thousand  each  year.  Water 
communication  between  the  Atlantic  Ocean  and  the  very  center  of 
the  United  States  was  established  when  the  Erie  Canal  connected  the 
Hudson  River  to  the  waterway  afforded  by  the  series  of  great  inland 
seas.  There  were  1,343  miles  of  canals  in  operation  in  all  the  United 
States,  and  1,828  miles  more  were  in  the  process  of  construction. 
Louisville  was  rejoicing  in  the  completion  of  a  canal  around  the  falls 
of  the  Ohio ;  Ohio  and  Indiana  were  rapidly  pushing  the  work  on  the 
canals  that  were  to  tap  the  regions  hitherto  tributary  only  to  the 
Mississippi;  the  construction  of  the  Pennsylvania  Canal  was  being 
hurried  forward  to  enable  Philadelphia  to  recover  the  trade  lost  to 
the  Erie;  Maryland  and  Virginia  were  persistently  going  on  with  the 

3  F.  J.  Turner,  Rise  of  the  New  West,  p.  297. 


10  INTERNAL  COMMERCE   OF  THE   UNITED   STATES 

building  of  the  waterway  westward  from  Chesapeake  Bay.  And 
meanwhile  44  miles  of  railway  had  been  completed  and  were  in  opera- 
tion, and  to  show  that  confidence  in  the  new  device  was  not  lacking, 
422  miles  were  in  the  process  of  construction  and  697  miles  more  were 
already  projected. 

II 

1830-1860 

The  years  between  1830  and  1860  witnessed  a  remarkable  expansion 
of  the  United  States  in  area,  population  and  wealth.  By  the  annexa- 
tion of  Texas  and  by  treaties  with  England  and  Mexico,  nearly  a 
million  square  miles  of  territory  were  added  to  the  national  domain 
and  the  western  boundary  was  pushed  to  the  Pacific  Ocean.  The 
total  number  of  people  increased  in  the  thirty  years  from  12,866,020 
to  31,443,321;  the  total  wealth  from  about  $2,000,000,000  to  more 
than  $16,000,000,000.  It  was  a  period  of  great  prosperity  for  all 
branches  of  industry.  As  the  tide  of  settlers  swept  over  the  fertile 
lands  drained  by  the  Mississippi  River  and  Great  Lakes,  the  agricul- 
tural production  of  the  country  increased  with  amazing  rapidity. 
The  production  of  corn  in  1859  was  almost  1,000,000,000  bushels;  of 
wheat  and  oats  175,000,000  bushels  each,  and  of  cotton  4,300,000 
bales,  while  the  live  stock  of  the  country  that  year,  including,  among 
other  animals,  25,000,000  cattle,  22,000,000  sheep  and  33,000,000 
swine,  was  valued  at  $1,000,000,000.  The  exploitation  of  the  mineral 
resources  of  the  nation  was  carried  on  more  rapidly.  From  300,000 
tons  of  coal  mined  in  1830,  the  quantity  grew  to  13,000,000  tons  in 
1860;  the  iron  mines  turned  out  1,000,000  tons  of  ore  in  1860,  the 
copper  mines  7,000  tons  and  the  lead  mines  15,000  tons,  while  the 
production  of  gold  in  the  far  West,  which  began  in  1849,  averaged 
$55,000,000  annually  during  the  following  ten  years.  Manufacturing 
likewise  grew  in  importance,  the  value  of  its  products  rising  to  nearly 
$2,000,000,000  in  1859.  The  tendency  toward  a  territorial  division 
of  industry  was  accentuated  during  this  period.  Cotton  cultivation 
became  more  than  ever  the  dominant  industry  of  the  entire  South;  ^ 
most  of  the  manufacturing  was  done  in  the  New  England  and  Middle/' 
Atlantic  States;  the  Northern  Central  States  were  devoted  primarily 
to  the  production  of  grain  and  live  stock. 

The  development  of  the  country  was  accompanied  by  the  construc- 
tion of  transportation  facilities  to  care  for  the  expanding  trade.     A 


INTERNAL   COMMERCE   OF   THE   UNITED   STATES  11 

large  number  of  important  canals  were  completed;  the  Ohio  River  was 
joined  to  Lake  Erie;  Pittsburgh  and  Philadelphia  were  connected  by 
a  rail  and  water  line;  the  Illinois  River  was  connected  with  Lake 
Michigan  at  Chicago;  the  St.  Mary's  Falls  Canal  was  built  to  aid  the 
navigation  of  the  Great  Lakes,  and  many  other  waterways  of  lesser 
importance  were  constructed.  Railroads  grew  rapidly  in  favor  and  as 
time  went  on  they  were  built  in  increasing  numbers  and  the  construc- 
tion of  canals  was  practically  abandoned.  Before  1840  over  2,800 
miles  of  track  were  laid  and  by  1850  the  mileage  amounted  to  9,000. 
The  decade  from  1850  to  1860  was  a  period  of  extensive  railway 
construction,  especially  in  the  Northern  Central  States,  where  more 
than  10,000  miles  were  built.  Early  in  the  decade  the  trunk  lines  of 
the  Eastern  States  were  pushed  across  the  mountains  and  through 
railway  connection  was  established  between  the  Mississippi  Valley 
and  the  Atlantic  Ocean.  New  York  was  connected  with  Chicago  by 
a  direct  rail  route  in  1853,  and  with  St.  Louis  in  1855,  and  in  1858  a 
railroad  reached  the  Missouri  River.  In  the  South,  roads  were  built 
into  the  interior  from  all  the  important  cities  on  the  Atlantic  and  Gulf 
coasts.  In  1860  there  was  a  total  of  30,626  miles  of  railroad  in  the 
entire  coimtry. 

With  the  growth  of  population  and  wealth,  the  diversification  of 
industry  and  the  development  of  canals  and  railroads,  there  was  a 
great  increase  in  internal  commerce.  The  trade  of  this  period  con- 
sisted of  a  few  well-defined  currents  flowing  between  certain  sections. 
A  large  volume  of  products,  mainly  agricultural,  went  from  the 
Central  States  to  the  East,  and  a  traffic  of  less  volume  but  of  greater 
value  moved  in  the  reverse  direction.  There  was  a  heavy  internal 
movement  from  the  Northern  to  the  Southern  States  and  a  light 
movement  from  the  South  to  the  North.  Aside  from  these  move- 
ments, there  was  an  over-land  trade  by  pack-horse  and  wagon  with 
the  Far  West  which  became  of  particular  importance  after  the  dis- 
covery of  gold.  For  the  sake  of  greater  clearness,  these  different  cur- 
rents of  trade  will  be  considered  separately  in  the  order  named. 

1.   TRADE   BETWEEN  THE  EASTERN   AND   CENTRAL  STATES 

One  of  the  notable  features  of  the  internal  commerce  following  1830 
was  the  rise  of  the  trade  on  the  Great  Lakes.  After  the  opening  of 
the  Erie  Canal  there  was  a  large  migration  to  the  lands  around  the 
lakes;  in  a  few  years  thousands  of  acres  of  land  were  cleared  and  put 


12  INTERNAL   COMMERCE   OF  THE  UNITED   STATES 

imder  cultivation;  the  center  of  cereal  production  shifted  westward; 
and  hundreds  of  shiploads  of  grain  were  borne  over  the  lakes  toward 
eastern  markets.  Ohio  was  the  first  state  west  of  New  York  to 
ship  grain  over  the  lakes.  By  1835,  Indiana  and  Michigan  were  send- 
ing grain  eastward  over  Lake  Erie;  in  1836  the  first  shipment  from 
Lake  Michigan  was  recorded;  in  1838  a  shipment  of  78  bushels  of 
wheat  from  Chicago  marked  the  beginning  of  the  cereal  trade  of  that 
city,  and  in  1841  the  first  exportation  of  Wisconsin  wheat  left  the 
harbor  of  Milwaukee. 

The  growth  of  the  lake  grain  trade  was  exceedingly  rapid.  As 
soon  as  the  Ohio  Canal  was  completed  (1832)  there  was  a  diversion 
of  traffic  from  the  Mississippi  River  to  Lake  Erie,  and  as  early  as 
1838,  the  receipts  of  western  wheat  and  flour  at  Buffalo  were  larger 
than  the  receipts  at  New  Orleans.  The  repeal  of  the  English  Com 
Laws  in  1846  gave  a  great  stimulus  to  cereal  production  in  the  United 
States.  As  the  population  of  the  Central  States  increased  and  as 
canals  and  railroads  were  built  to  connect  all  parts  of  the  cereal  belt 
with  the  lake  cities,  the  lake  grain  trade  constantly  swelled  in  volume. 
In  1860  the  receipts  of  grain  by  lake  at  Buffalo,  Oswego,  Dunkirk, 
Ogdensburg  and  Cape  Vincent  amounted  to  62,000,000  bushels.  The 
shipment  from  Lake  Michigan  ports  that  year  were  43,000,000  bushels, 
half  of  which  came  from  Chicago  alone. 

Though  grain  and  flour  constituted  the  most  important  part  of  the 
eastbound  lake  traffic,  there  was  at  the  same  time  a  considerable  trade 
in  other  commodities.  Large  quantities  of  pork,  bacon,  beef,  lard, 
and  other  provisions  were  sent  to  Buffalo  for  distribution  eastward; 
hides,  wool,  whiskey  and  live  stock  formed  an  important  part  of  the 
traffic.  Millions  of  feet  of  lumber  were  transported  annually  from 
Michigan  and  Wisconsin  to  all  the  other  lake  states;  the  shipment  of 
copper  from  Lake  Superior  began  in  1845,  and  the  iron  ore  traffic 
began  ten  years  later. 

The  westbound  shipments  over  the  lakes  were  also  large  and  valua- 
ble. In  1836,  $9,000,000  worth  of  merchandise  was  sent  to  western 
states  over  the  Erie  Canal  and  the  lakes,  and  by  1854  the  amount 
reached  $94,000,000.  After  the  latter  year  there  was  a  rapid  decline 
in  the  merchandise  traffic  over  the  canal  and  lake  route  because  of 
railway  competition.  The  shipments  to  the  West  consisted  mainly 
of  dry  goods,  clothing,  machinery,  railroad  iron,  drugs,  imported 
foodstuffs,  household  furniture,  salt  and  coal. 

The  trade  over  the  Great  Lakes  and  Erie  Canal  was  without  doubt 


INTERNAL   COMMERCE   OF  THE   UNITED   STATES  13 

the  most  important  feature  of  the  commerce  between  the  Atlantic 
States  and  the  interior  of  the  country  between  1830  and  1860,  but 
this  route  by  no  means  absorbed  all  the  traffic.  The  Main  Line  of 
the  Pennsylvania  canal  system,  completed  in  1832,  made  it  possible 
for  Philadelphia  and  Baltimore  to  retain  some  of  their  trade  with  the 
cities  of  the  Ohio  Valley,  but  this  trade,  like  the  wagon  trade  pre- 
ceding it,  was  largely  one-sided,  the  westbound  movement  of  light 
merchandise  exceeding  the  eastbound  movement  of  agricultural  pro- 
duce. The  inclined  planes  which  carried  the  traffic  across  the  moun- 
tains proved  to  be  an  expensive  and  cumbersome  device,  and  because 
of  a  lack  of  better  transportation  facilities,  the  trade  of  Philadelphia 
and  Baltimore  suffered  constant  losses,  and  for  a  time  it  seemed  that 
New  York  was  destined  to  monopolize  the  entire  commerce  between 
the  Atlantic  coast  and  the  trans-Appalachian  region. 

In  1841,  however,  this  situation  was  modified  by  the  entrance  of 
a  new  factor — the  Western  Railroad,  the  completion  of  which  gave 
through  rail  connection  between  Boston  and  Albany.  Because  of  its 
isolated  position  Boston  had  not  shared  in  the  direct  trade  with  the 
Central  States,  but  had  been  compelled  to  buy  and  sell  through  the 
merchants  of  New  York  and  Philadelphia.  The  new  railroad  com- 
pletely altered  the  position  of  Boston  and  brought  an  era  of  great 
prosperity  to  the  city,  at  the  same  time  demonstrating  the  practica- 
bility of  the  steam  road  as  a  carrier  of  nearly  all  kinds  of  freight. 

The  immediate  success  of  this  road  was  a  signal  for  the  beginning 
of  more  extensive  railway  construction,  and  the  decade  from  1850  to 
1860  witnessed  the  entrance  of  the  trunk  line  roads  as  competitors 
with  the  canals  for  traffic  between  the  East  and  the  West.  The 
failure  of  the  Pennsylvania  Canal  and  the  growing  prosperity  of  Bos- 
ton incited  the  people  of  Pennsylvania  to  take  decisive  steps  to  win 
back  some  of  the  trade  lost  by  Philadelphia  and  in  1846  the  Pennsyl- 
vania Railroad  Company  was  chartered  for  the  purpose  of  completing 
steam  railway  connection  between  Philadelphia  and  Pittsburgh.  By 
1854,  this  Ime,  the  Erie,  the  New  York  Central  and  the  Baltimore  and 
Ohio  all  reached  the  Ohio  River  or  Lake  Erie.  During  the  next  six 
years  these  four  lines  took  over  two-thirds  of  the  flour  traffic  and 
practically  all  the  merchandise  and  live-stock  traffic  between  the 
eastern  cities  and  the  trans-Alleghany  region,  leaving  to  the  Erie 
Canal  the  forest  products  and  grain.  In  addition  to  capturing  a 
large  share  of  the  canal  freight  the  railroads  easily  secured  most  of 
the  traffic  that  was  accustomed  to  go  from  the  cities  along  the  Ohio 


14  INTERNAL   COMMERCE   OF  THE  tJNITED   STATES 

River  to  the  eastern  coast  and  to  Europe  by  way  of  New  Orleans. 
The  lakes  and  canals  had  previously  made  some  inroad  on  the  com- 
merce down  the  Mississippi,  but  notwithstanding  their  influence  the 
river  cities  of  Ohio  and  Kentucky  continued  to  send  the  largest  part 
of  their  exports  southward  until  the  railroads  gave  them  a  through 
route  to  the  East.  After  1855  the  shipments  down  the  river  from 
Cincinnati  and  other  important  ports  on  the  Ohio  shrunk  rapidly  in 
volume  and  even  before  the  war  broke  out  their  commerce  with  the 
East  was  much  larger  than  their  river  trade  to  the  South. 

While  the  railroads  in  the  North  were  making  such  marked  changes 
in  the  course  of  internal  trade,  a  similar  transformation  was  occurring 
in  the  South.  Trade  between  the  eastern  and  western  sections  of 
the  cotton  states  before  1849,  aside  from  some  traffic  in  slaves,  was 
almost  negligible.  In  1849  when  the  Western  Atlantic  Railroad  began 
to  run  trains  from  Chattanooga  to  the  Atlantic  coast,  the  planters 
of  Northern  Alabama  and  Tennessee,  who  had  always  sent  their  cot- 
ton to  New  Orleans  and  Mobile,  turned  to  the  markets  at  Charleston 
and  Savannah.  The  cotton  receipts  at  those  two  ports  doubled  in  a 
single  year,  while  the  receipts  at  New  Orleans  fell  off  nearly  100,000 
bales.  The  shifting  of  the  center  of  cotton  production  farther  west- 
ward enabled  New  Orleans  to  make  up  for  its  losses,  but  the  South 
Atlantic  ports  easily  maintained  and  increased  their  trade.  They 
also  competed  with  New  Orleans  and  the  cities  on  the  Ohio  River  for 
the  merchandise  trade  of  Alabama,  Mississippi  and  Tennessee,  and 
the  provisions  for  Georgia  and  South  Carolina  began  to  enter  the 
states  overland  from  the  West,  the  coasting  trade  on  the  Atlantic 
seaboard  both  gaining  and  losing  by  the  changes. 

2.  TRADE  BETWEEN  THE  NORTH  AND  SOUTH 

The  general  character  of  the  internal  commerce  between  the  North 
and  South,  between  1830  and  1860,  differed  but  little  from  what  it 
had  been  before  the  former  year.  There  were  no  through  rail  con- 
nections between  the  two  sections  until  near  the  close  of  the  period, 
and  consequently  almost  the  entire  commerce,  aside  from  that  in 
slaves  and  live  stock,  consisted  of  the  trade  on  the  waters  of  the  Mis- 
sissippi River  system. 

This  was  the  golden  age  of  the  river  trade.  Each  year  it  grew 
steadily  in  volume,  reaching  a  point  of  prosperity  in  1860  never 
equalled  before  or  since.     Until  the  railroads  began  to  divert  the 


INTERNAL   COMMERCE   OP  THE   UNITED   STATES  15 

traffic  in  flour  and  provisions  after  1850,  the  cities  on  the  Ohio  River 
sent  most  of  the  produce  collected  at  their  markets  to  New  Orleans 
to  be  shipped  to  Europe  and  the  Eastern  States  or  to  be  sold  to  the 
planters  of  the  cotton  belt.  After  1850,  as  the  surplus  agricultural 
produce  of  the  Ohio  Valley  was  diverted  from  the  river,  its  place  was 
taken  by  that  coming  from  the  fertile  region  around  St.  Louis,  where 
thousands  of  immigrants  were  settling  in  new  homes.  Moreover, 
the  loss  of  traffic  in  agricultural  produce  from  Pennsylvania,  Ohio  and 
Kentucky  was  compensated  for  by  the  increasing  volume  of  manufac- 
tured goods  and  coal  coming  down  from  Cincinnati,  Louisville  and 
Pittsburgh.  Thus  the  downstream  traffic  from  the  Northern  States, 
though  suffering  a  heavy  relative  loss,  made  an  absolute  gain,  and 
with  the  enormous  amounts  of  cotton  shipped  down  the  river  added 
to  this  traffic,  the  Mississippi  carried  considerably  more  produce  to 
the  sea  than  either  the  Hudson  River  or  the  eastern  roads.  As  before 
1830,  the  trade  up  the  river  failed  to  keep  pace  with  the  movement 
downstream.  Of  the  shipments  upstream,  75  per  cent  consisted  of 
articles  previously  sent  down  and  resold  to  planters  of  Mississippi, 
Louisiana  and  Arkansas.  The  district  north  of  these  states  bought 
some  sugar  and  coffee  of  New  Orleans,  but  drew  practically  all  its 
manufactures  and  other  imported  goods  from  the  East. 

The  value  of  the  receipts  of  produce  at  New  Orleans  advanced 
from  $22,000000  in  1830  to  $185,000,000  in  1860.  The  largest  part 
of  the  increa,se  resulted  from  the  growth  of  the  cotton  trade.  The 
receipts  of  *' Western  produce,"  which  in  1820  formed  58  per  cent  of 
the  commodities  entering  New  Orleans,  constituted  only  23  per  cent 
of  the  total  receipts  in  1860.  But  though  showing  a  relative  decline, 
the  receipts  of  foodstuffs  and  merchandise  had  a  steady  aggregate 
increase.  As  a  cotton  market.  New  Orleans  had  no  close  rival.  Its 
receipts  of  this  great  staple  in  1860  amounted  to  $109,000,000. 

St.  Louis  was  the  city  of  next  importance  on  the  Mississippi.  Until 
after  1855,  St.  Louis  remained  strictly  a  river  city,  almost  entirely 
dependent  upon  the  Mississippi  and  its  tributaries  for  both  the  im- 
portation and  exportation  of  the  flour,  grain,  meat,  tobacco,  lead  and 
other  goods  that  entered  and  left  its  busy  markets.  After  the  city 
secured  railway  connection  with  the  East  in  1855  a  large  part  of  the 
traffic  entering  from  that  direction  was  transferred  to  the  railroads, 
and  some  of  the  traffic  leaving  the  city  was  diverted  from  the  southern 
river  route  to  the  eastern  railway  route.  However,  the  volume  of 
trade  taken  from  the  Mississippi  was  not  large  at  first  and  the  move- 


16  INTERNAL   COMMERCE   OF   THE   UNITED    STATES 

ment  of  commodities  southward  showed  no  marked  decline  until 
the  outbreak  of  the  Civil  War. 

Next  to  the  river  trade,  the  trade  in  live  stock  and  slaves  was  the 
most  important  element  in  the  internal  commerce  between  the  North 
and  the  South.  Each  year  large  droves  of  horses,  mules,  cattle  and 
hogs  were  driven  into  the  South  from  the  Northern  and  ''border" 
states,  the  farmers  all  over  the  corn-raising  section  finding  an  un- 
failing source  of  gain  in  the  demand  for  live  stock  in  the  southern 
cotton  fields.  The  domestic  slave  trade  commenced  to  be  of  impor- 
tance after  1820,  when  cotton  culture  spread  among  the  Gulf  States. 
Slaves  were  bought  in  South  Carolina,  Georgia,  Alabama,  Mississippi, 
Louisiana,  Arkansas  and  Texas,  and  exported  from  Virginia,  Mary- 
land, North  CaroUna,  Kentucky,  Tennessee,  Missouri  and  Delaware. 
Though  no  statistics  of  the  volume  of  the  internal  slave  trade  exist, 
evidence  from  contemporary  accounts  indicates  that  it  was  unques- 
tionably extensive,  probably  reaching  a  value  of  $30,000,000  a  year 
in  the  late  fifties. 

3.   TRADE   OF  THE   FAR  WEST 

Long  before  Texas  and  the  California  territory  became  a  part  of 
the  United  States,  enterprising  merchants  on  the  western  frontier 
began  a  merchandise  trade  with  the  Mexican  settlements  in  what  is 
now  New  Mexico.  By  1843  this  trade  reached  an  annual  value  of 
$500,000.  After  the  occupation  of  the  territory  by  the  United  States 
troops  it  became  much  larger,  reaching  a  total  value  in  1860  of  $3,800,- 
000.  The  chief  shipping  points  were  Independence  and  Kansas  City, 
Missouri.  Transportation  was  supplied  by  regular  freighters  who 
employed  a  large  number  of  men  to  conduct  the  white-topped  prairie 
schooners  across  the  unsettled  plains  between  the  Missouri  River  and 
the  mountains.  New  Mexico  paid  for  its  imports  with  bullion  and 
wool  produced  in  the  territory,  or  with  money  secured  by  the  sale 
of  sheep  driven  to  California,  or  by  the  sale  of  a  scanty  agricultural 
produce  to  government  military  posts  and  Indian  agencies. 

In  addition  to  the  wagon  trade  with  New  Mexico,  the  Missouri 
River  cities  carried  on  a  similar  trade  with  Utah  after  its  occupation 
by  the  Mormons  in  1848.  When  gold  was  discovered  in  Colorado 
in  1859  there  was  an  immediate  rush  of  settlers  to  that  territory, 
which  was  accompanied  by  the  rise  of  a  large  trade  in  tools  and  provi- 
sions. There  was  no  regular  overland  freight  traffic  to  the  Pacific 
coast,  the  commerce  of  California  with  the  rest  of  the  country,  aside 


INTERNAL   COMMERCE   OP  THE  UNITED   STATES  17 

from  the  sheep  trade  with  New  Mexico,  being  carried  on  around 
Cape  Horn  or  across  Central  America.  Within  California  itself  there 
was  an  extensive  trade  between  San  Francisco  and  the  agricultural, 
lumbering  and  mining  districts  of  the  surrounding  regions. 

4.   CONCLUSION 

The  expansion  of  the  volume  of  the  internal  trade  of  the  United 
States  during  this  epoch  more  than  justified  the  expectations  existing 
at  1830.  The  improvement  of  the  faciHties  for  communication  and 
transportation,  permitted  a  continually  increasing  accentuation  of 
a  territorial  division  of  labor  which  fostered  the  growth  of  mutual 
dependence  between  regions  where  geographic,  social  or  other  condi- 
tions led  naturally  to  the  predominance  of  a  special  type  of  industry. 
The  manufacturing  and  commercial  population  of  the  Northeast  was 
fed  by  the  farm  products  of  the  Central  States  and  the  inhabitants  of 
the  Central  States  drew  their  imported  supplies,  their  clothing,  shoes 
and  large  quantities  of  other  manufactured  goods  and  general  mer- 
chandise from  the  Eastern  markets.  The  South  relied  upon  the 
North  for  food,  manufactures  and  imports.  The  North  in  turn 
bought  from  the  South  raw  materials  for  its  cotton  and  sugar  indus- 
tries, and  the  Northern  shipping  interests  carried  to  European  mar- 
kets the  heavy  exports  of  Southern  cotton,  the  proceeds  from  which 
paid  the  Southern  debts  in  Northern  States  and  settled  the  large 
unfavorable  balance  of  the  Northern  foreign  trade. 

The  multiplication  of  factories  in  the  North  together  with  the 
spread  of  cotton  culture  in  the  South  and  the  opening  of  foreign 
markets  to  American  grain  brought  about  the  demand  for  cereal 
products,  which  the  agricultural  interests  had  been  so  anxious  to 
create.  When  the  market  problem  was  solved,  the  tariff  duties  were 
reduced  to  a  revenue  basis. 

In  the  solution  of  the  transportation  problem  the  people  freely 
used  their  political  institutions.  Nearly  all  the  numerous  canals 
built  after  1825  and  several  of  the  early  railroads  were  public  enter- 
prises, undertaken  by  state  governments.  However,  the  states  proved 
unable  to  cope  with  the  problem  of  administering  their  railways 
and  canals,  and  surrendered  the  field  of  transportation  to  private 
corporations,  which  were  helped  to  carry  out  the  work  by  generous 
and  munificent  gifts  of  land  and  money  from  federal,  state  and  local 
governments.  s 


18  INTERNAL   COMMERCE   OF  THE   UNITED   STATES 

Unfortunately  the  federal  government  did  not  attempt  to  estab- 
lish a  satisfactory  currency  system.  In  1837  and  again  in  1857  the 
country  was  visited  by  a  financial  panic  due  in  a  large  measure  to 
extravagant  speculation,  much  of  which  would  have  been  impossible 
had  the  issue  of  money  been  properly  regulated. 

On  the  whole  the  period  from  1830  to  1860  was  one  of  great  pros- 
perity and  contentment.  The  wealth  of  the  nation  grew  enormously 
and  for  the  most  part  it  was  equally  distributed,  there  being  few 
paupers  and  still  fewer  very  rich  individuals.  The  twenty  years 
following  1840  have  been  called  the  "golden  age"  of  American  history, 
and  as  far  as  concerns  the  diffusion  of  material  comforts  they  cer- 
tainly deserve  the  name. 

Notwithstanding  the  great  material  prosperity  however,  the  flames 
of  sectionalism,  which  had  blazed  forth  during  the  contest  over  the 
adoption  of  the  "American  System"  remained  unquenched  even  after 
the  question  of  protection  had  ceased  to  be  an  important  political 
issue.  Filled  with  animosity  engendered  by  the  thought  that  the 
economic  progress  of  the  North  had  been  effected  at  the  expense  of 
the  South,  and  fearful  that  the  fulminations  of  the  abohtionists  and 
the  successful  efforts  of  the  Northern  poHtical  leaders  to  restrict  the 
territorial  expansion  of  slavery  only  foretold  an  ultimate  intention 
of  destroying  that  institution  altogether,  the  Southern  partisans 
decided  to  sever  the  political  bonds  between  the  two  sections,  the 
economic  institutions  of  which  differed  so  widely,  and  to  establish  a 
separate  state  whose  political  ideals  would  conform  to  its  economic 
and  social  predilections.  This  decision  the  Southerners  stood  ready 
to  enforce  by  an  appeal  to  arms;  the  people  of  the  North,  preferring 
"to  accept  war  rather  than  let  the  nation  perish,"  made  ready  to 
prevent  the  proposed  dissolution  of  the  Union;  and  the  era  of  general 
happiness  and  comfort  ended  amid  the  preparations  for  the  impending 
struggle. 

Ill 

1860-1900 

The  Civil  War  marked  a  notable  turning  point  in  the  economic 
history  of  the  United  States.  National  development  since  1860  has 
been  shaped  to  a  large  degree  by  fundamental  political  and  economic 
changes  that  occurred  during  the  war — changes  which  were  for  the 
most  part  the  effect  of  various  expedients  resorted  to  by  the  federal 
government  to  bring  the  struggle  for  the  preservation  of  the  Union  to  a 


INTERNAL   COMMERCE   OF   THE   UNITED   STATES  19 

successful  issue.  To  crush  the  military  strength  of  the  South  the 
federal  authorities  adopted  the  expedient  of  the  abolition  of  slavery, 
and  to  the  surprise  of  both  the  North  and  the  South  ''the  cause  of 
the  conflict  ceased  before  the  conflict  itself,"  and  the  nation  emerged 
from  the  war  freed  of  the  greatest  obstacle  to  its  social  homogeneity. 
To  secure  revenue  for  the  prosecution  of  the  war,  the  duties  on  im- 
ports were  raised  to  an  unprecedented  point,  and  when  Congress 
failed,  after  the  return  of  peace,  to  reduce  the  tariff  schedules  to  their 
former  level,  manufacturing  interests  found  themselves  protected  >» 
by  a  tariff  wall  so  high  that  foreign  competition  was  largely  elimi- 
nated. To  secure  needed  aid  in  financing  the  costly  struggle,  Congress 
established  the  national  banking  system  which  gave  greater  uniformity  ^ 
to  the  currency  and  brought  the  financial  centers  of  the  country  into 
closer  relation.  The  anxiety  to  connect  the  Atlantic  and  Pacific 
coasts  by  rail  led  the  federal  government  to  adopt  the  practice  of 
granting  large  subsidies  to  the  builders  of  great  transcontinental  ^ 
railway  lines.  The  stimulation  which  the  war  gave  to  manufacturing 
and  transportation  in  the  North  and  the  shrewd  manipulation  of  the 
money  market  during  the  years  of  the  national  crisis  made  possible ' 
the  accumulation  and  concentration  of  large  quantities  of  capital 
funds  under  the  control  of  a  small  number  of  persons. 

It  was  inevitable  that  such  radical  changes  would  modify  the  course 
of  industrial  progress.  Because  of  the  importance  of  slavery  as  the 
underlying  cause  of  the  war,  there  has  been  a  natural  tendency  to 
regard  its  abolition  as  the  most  striking  and  significant  net  result  of 
the  great  conflict,  but  it  is  to  be  doubted  whether  the  emancipation  of 
the  negro  had  as  great  an  effect  on  subsequent  economic  develop- 
ment as  the  other  innovations,  which  were  so  obscured  by  the  turmoil 
of  the  war  that  they  received  but  little  attention  and  were  regarded 
as  being  of  much  less  significance.  The  complete  transformation  in  , 
the  tariff  policy  of  the  nation  permitted  the  growth  of  manufactur- 
ing to  an  extent  that  would  have  been  impossible  had  the  war  not 
occurred;  the  construction  of  the  transcontinental  railroads  had  an 
immeasurable  effect  on  the  development  of  the  great  region  west  of 
the  Missouri  river;  the  concentration  of  capital  provided  the  means  ^ 
by  which  industrial  enterprises  could  be  carried  out  on  a  gigantic 
scale;  the  establishment  of  a  uniform  currency  and  a  better  banking  h 
system  accelerated  the  growth  of  industry  and  trade.  It  is  in  these 
changes  that  one  finds  the  key  to  much  of  the  economic  history  of 
the  United  States  since  the  Civil  War. 


20         INTERNAL  COMMERCE  OF  THE  UNITED  STATES 

The  period  from  1860  to  1900  was  one  of  development  and  exploi- 
tation. The  years  prior  to  the  Civil  War  had  been  marked  by  the 
advance  of  the  political  dominion  of  the  United  States  to  the  Pacific 
Ocean,  and  at  the  same  time  the  nation  had  enjoyed  an  era  of  notable 
agricultural,  industrial  and  commercial  prosperity,  especially  in  the 
states  east  of  the  Mississippi  River.  However,  the  tremendous 
possibilities  of  the  country  were  only  beginning  to  be  realized  in  1860, 
and  remarkable  as  was  development  before  that  year,  it  was  com- 
pletely eclipsed  by  the  amazing  progress  made  during  the  latter  part 
of  the  century.  An  abundance  of  unoccupied  land,  of  rich  and  varied 
natural  resources,  favorable  climatic  conditions,  a  complete  absence 
of  checks  on  individual  initiative  and  enterprise  and  of  restrictions  on 
internal  communication  and  trade,  and  the  encouragement  afforded 
to  industry  by  the  liberal  policies  of  the  federal  government  all  com- 
bined to  create  economic  opportunities  of  boundless  scope.  Labor, 
capital  and  transportation  facilities  alone  were  needed  and  as  these 
increased  the  wealth  production  of  the  United  States  multiplied 
with  astonishing  rapidity.  The  extension  of  the  railway  system 
permitted  the  constant  growth  of  agriculture  and  rendered  accessible 
the  mineral  and  forest  products  in  which  the  land  abounded;  cheap 
and  plentiful  raw  materials  from  field,  mine  and  forest,  made  possible 
a  phenomenal  increase  of  manufacturing.  Multitudes  of  European 
immigrants,  eager  to  share  in  the  wealth  of  the  new  world,  poured  in 
and  recruited  the  labor  force  necessary  for  the  industrial  conquest; 
and  the  invention  and  application  of  labor-saving  machinery  of  every 
description  increased  many  fold  the  effectiveness  of  the  effort  of 
each  individual.  All  parts  of  the  country  participated  in  the  mate- 
rial progress.  The  South,  issuing  quickly  from  the  almost  abject 
state  of  prostration  in  which  it  was  left  by  the  ravages  of  a  disastrous 
war,  became  more  prosperous  and  flourishing  than  ever;  the  Northern 
States  east  of  the  Mississippi  constantly  increased  their  agricultural 
production,  and  at  the  same  time  became  one  of  the  greatest  manufac- 
turing and  mining  districts  in  the  world;  on  the  prairie  lands  west  of 
the  Mississippi  a  new  cereal  kingdom  was  founded;  the  western  plains 
were  converted  into  great  live  stock  ranches;  the  forests,  orchards 
and  grain  fields  of  the  Pacific  States  proved  to  be  an  even  greater 
source  of  wealth  than  were  their  mines  of  gold  and  silver. 

In  the  forty  years  following  1860  the  number  of  people  in  the  United 
States,  exclusive  of  outlying  possessions,  rose  from  31,000,000  to 
76,000,000,  the  wealth  of  the  nation  grew  from  $16,000,000,000  to 


INTERNAL   COMMERCE   OF  THE   UNITED   STATES  21 

$89,000,000,000.  These  jfigures  convey  some  idea  of  the  progress  of 
the  country  as  a  whole.  Such  an  advance  was  possible  only  by  the 
most  rapid  expansion  of  all  the  numerous  lines  of  industry  to  which 
the  resources  and  energies  of  the  nation  were  devoted. 

The  growth  of  agriculture  proceeded  on  a  magnificent  scale.  With-  ^ 
in  two  decades  after  the  war  the  United  States  assumed  the  leading 
place  among  all  nations  of  the  world  in  the  production  of  grain  and 
live  stock,  maintaining  at  the  same  time  its  supremacy  as  a  producer 
and  exporter  of  cotton  and  tobacco.  Countless  thousands  of  acres 
of  virgin  soil  west  of  the  Mississippi  River  were  given  away  under  the 
provisions  of  the  famous  Homestead  Act  of  1862  and  by  1880  the 
continent  was  practically  settled  from  one  coast  to  the  other.  The 
area  of  farm  lands  increased  from  407,000,000  acres  in  1859  to  841,- 
000,000  acres  in  1899,  and  the  value  of  farm  property  rose  from 
$8,000,000,000  to  $21,000,000,000.  The  application  of  machinery  to 
the  cultivation  of  the  soil  and  the  substitution  of  horse  and  steam 
power  for  manual  labor  multiplied  the  productivity  of  each  unit  of 
land  and  labor.  In  1899  the  country  produced  from  its  fields  4,500,- 
000,000  bushels  of  cereals,  9,500,000  bales  of  cotton,  79,000,000  tons 
of  hay  and  868,000,000  pounds  of  tobacco.  The  value  of  the  live 
stock  that  year  was  $3,000,000,000,  and  the  production  of  dairy 
products,  poultry  and  eggs  amounted  to  $750,000,000. 

The  output  of  the  mines  increased  in  value  from  $219,000,000  in 
1869  to  $1,107,000,000  in  1899.  Over  240,000,000  tons  of  coal, 
27,000,000  tons  of  iron  ore,  270,000  tons  of  copper,  and  63,000,000 
barrels  of  petroleum  were  taken  from  the  earth  during  the  latter 
year. 

The  most  significant  feature  of  the  economic  history  of  the  United 
States  between  1860  and  1900  was  the  rise  of  manufacturing.  The 
radical  change  in  tariff  policy,  the  rapid  expansion  of  the  home  market 
due  to  the  tremendous  growth  of  agriculture  and  the  spread  of  rail- 
roads, and  the  presence  of  an  unlimited  amount  of  cheap  fuel  and  raw 
materials  all  combined  to  make  manufacturing  in  some  respects  the 
dominant  industry  of  the  country.  The  value  of  the  products  of 
manufactures  in  1899  reached  a  total  of  $13,000,000,000. 

Simultaneously  with  the  expansion  of  agriculture,  the  exploitation  ■> 
of  natural  resources  and  the  rise  of  manufacturing,  partly  as  an  effect 
of  them  but  almost  equally  as  a  cause,  came  the  development  of  the 
great  transportation  system.     This  was  the  era  of  the  railroad.    Im- 
mediately after  the  war  there  began  a  period  of  extensive  construction, 


22         INTERNAL  COMMERCE  OP  THE  UNITED  STATES 

over  35,000  miles  of  line  being  laid  between  1865  and  1874.  The 
first  transcontinental  line  was  completed  in  1869.  Unfortunately 
the  enormous  increase  of  mileage  during  these  years  was  considerably 
in  excess  of  the  needs  of  the  country,  and  the  speculative  fever  which 
attended  the  expansion  resulted  in  the  panic  of  1873.  After  a  period 
of  depression  of  five  years  there  was  a  second  and  much  greater  re- 
vival of  construction.  Between  1878  and  1890  over  85,000  miles  of 
new  track  were  laid,  including  four  transcontinental  tracks  completed 
and  others  partially  finished.  By  1900  there  were  199,000  miles  of 
railroad  spreading  a  vast  net  over  the  entire  country. 

The  important  result  of  the  growth  and  improvement  of  railways 
was  the  great  reduction  in  the  cost  of  transportation.  At  the  close 
of  the  period  before  the  war  it  had  been  demonstrated  that  railroads 
could  economically  carry  high  grade  freight  such  as  flour,  live  stock, 
lighter  manufactured  goods  and  general  merchandise,  but  as  yet 
they  had  been  unable  to  compete  successfully  with  waterways  for 
the  transportation  of  grain,  and  the  carriage  for  long  distances  of  such 
low-grade  freight  as  coal  and  ore  had  not  been  attempted.  As  the 
railway  developed,  however,  its  use  was  extended,  and  it  was  soon 
found  that  there  was  no  commodity  so  cheap  that  it  could  not  be 
profitably  handled.  Accompanying  the  extension  of  the  service  to 
include  all  kinds  of  bulky  freight  there  was  an  uninterrupted  decline 
in  the  general  level  of  rates  on  all  classes  of  goods,  resulting  from  the 
increased  efficiency  of  roads,  the  stress  of  competition,  and  above 
all  from  the  tremendous  increase  of  traffic.  The  rate  per  ton  per 
mile  decreased  from  1.92  cents  in  1867  to  0.73  of  a  cent  in  1900. 
This  reduction  of  transportation  charges  was  one  of  the  most  potent 
factors  determining  the  course  of  economic  progress.  Field,  mine, 
forest  and  store  were  linked  together  into  a  unified  whole;  raw  mate- 
rials could  be  concentrated  at  any  point  and  there  was  practically 
no  limit  to  the  extent  of  the  market  for  finished  commodities.  The 
increase  of  the  tonnage  of  railway  freight  from  less  than  20,000,000 
tons  in  1860  to  almost  600,000,000  tons  in  1900  is  the  best  index  of 
the  growth  of  internal  trade  during  this  period. 

/  As  the  railways  increased  in  importance,  transportation  on  most  of 
the  inland  waterways  declined.  Nearly  1,700  miles  of  canals  were 
abandoned  between  1860  and  1900.  After  1880  there  was  a  gradual 
decrease  of  nearly  all  canal  and  river  traffic.  The  Great  Lakes  were 
practically  the  only  inland  waterway  that  retained  an  important 
position  in  internal  trade.    The  unusually  favorable  conditions  pre* 


INTERNAL   COMMERCE   OF  •  THE   UNITED   STATES  23 

vailing  for  the  growth  of  traffic  on  these  bodies  of  water  enabled 
their  commerce  to  thrive  and  expand  at  a  rate  which  compared 
favorably  at  all  times  with  the  growth  of  railway  traffic. 

Commerce  has  been  aptly  defined  as  "taking  things  from  where 
they  are  plentiful  to  where  they  are  needed. '^  This  being  true,  the 
volume  of  internal  commerce  of  any  country  must  depend  upon  the 
number  of  its  people,  the  total  volume  of  its  production,  the  sectional 
diversity  of  its  products,  the  efficiency  and  cheapness  of  its  trans- 
portation, and  the  freedom  from  foreign  competition  in  the  sale  of 
native  commodities  in  home  markets.  In  the  economic  progress 
of  the  United  States  from  1860  to  1900,  there  was  a  continuous  and 
rapid  development  of  all  the  requisite  factors  for  the  existence  of  a 
large  internal  trade.  Population  more  than  doubled,  annual  produc- 
tion per  capita  quadrupled,  the  diversification  of  industry  became 
more  pronounced  and  the  transportation  system  developed  to  a 
degree  that  afforded  the  utmost  fluidity  of  movement  of  all  articles 
of  trade.  Furthermore,  the  range  of  movement  of  internal  trade 
was  greatly  widened  by  the  settlement  of  the  vast  expanse  of  new 
country  west  of  the  Mississippi  River. 

The  extent,  volume  and  complexity  of  internal  trade  during  this 
period  render  it  impossible  to  attempt,  within  the  scope  of  this  paper, 
to  give  a  connected  account  of  its  development.  However,  some 
idea  of  its  wonderful  expansion  may  be  conveyed  by  the  following 
brief  statement  of  the  growth  of  the  movement  of  some  of  the  most 
important  commodities. 

Cereals  and  Flour.  The  history  of  the  internal  grain  trade  from 
1860  to  1900  centers  around  the  receipts  and  shipments  at  the  great 
primary  grain  markets  situated  on  the  Great  Lakes  and  the  rivers  of 
the  upper  Mississippi  Valley.  In  1900  the  chief  surplus  cereal  area 
of  the  United  States  comprised  a  vast  stretch  of  territory  included 
in  a  semicircle  described  by  a  southern  and  western  sweep  of  a  com- 
pass moving  on  a  radius  extending  from  Duluth  to  Buffalo.  Three- 
fourths  of  the  4,500,000,000  bushels  of  grain  were  raised  in  the  twelve 
states  embraced  in  this  territory.  The  ten  most  important  markets 
in  the  region,  each  of  which  was  receiving  annually  from  10,000,000 
to  300,000,000  bushels  of  grain,  were  Chicago,  Minneapolis,  Duluth- 
Superior,  St.  Louis,  Milwaukee,  Toledo,  Kansas  City,  Peoria,  Cincin- 
nati and  Detroit.  From  each  of  these  points  there  radiated  toward 
the  South  and  West  a  network  of  railways  over  which  grain  came 
from  the  farming  districts  and  over  some  of  which  there  was  a  return 


24  INTERNAL  COMMERCE   OF  THE  UNITED   STATES 

movement  of  flour  and  grain  for  domestic  consumption  or  for  expor- 
tation from  Gulf  ports,  while  stretching  to  the  eastward  were  numer- 
ous rail  and  water  lines  by  which  an  immense  cereal  and  flour  traffic 
was  carried  to  the  manufacturing  districts  and  exporting  cities  of 
the  Atlantic  coast.  In  1900  the  ten  markets  named  received  about 
850,000,000  bushels  of  grain,  including  flour,  and  shipped  650,000,000 
bushels. 

Live  Stock  and  Meat  The  extension  of  railroads  to  the  grazing 
lands  of  the  West  and  the  tremendous  increase  of  corn  production 
in  the  Mississippi  Valley  after  1860  gave  a  great  impetus  to  live  stock 
raising.  Like  the  trade  in  grain  the  trade  in  live  stock  centered 
around  a  series  of  great  cities  located  centrally  within  easy  reach  of 
the  producing  sections  on  one  side  and  of  the  consuming  region  on  the 
other.  To  these  primary  markets  the  railroads  carried  thousands 
of  car  loads  of  stock — horses  and  mules  for  distribution  among  the 
farms  and  cities  of  the  East  and  South,  cattle,  hogs  and  sheep  for 
slaughter  at  the  packing  houses  at  the  primary  markets,  for  dis- 
tribution among  the  farms  of  the  Central  States  to  be  fattened  for 
subsequent  killing,  or  for  shipment  to  the  slaughter  pens  of  Eastern 
cities. 

Until  1863  Cincinnati  was  the  chief  meat  packing  city  of  the  coun- 
try, but  in  that  year  Chicago  took  the  lead  and  has  held  it  ever  since, 
and  as  the  live  stock  industry  shifted  westward,  St.  Louis,  Kansas 
City,  Milwaukee,  Indianapolis,  Omaha  and  St.  Joseph  in  turn  sur- 
passed Cincinnati  in  the  business.  The  trade  in  meat  was  revolu- 
tionized during  this  period  by  the  introduction  of  the  refrigerator 
car  which  made  possible  the  transportation  of  fresh  meat  for  any 
distance.  The  total  value  of  the  products  of  wholesale  slaughtering 
and  meat  packing  in  1900  amounted  in  value  to  $700,000,000,  of 
which  more  than  one-half  was  produced  in  three  cities,  Chicago, 
Kansas  City  and  South  Omaha.  In  Chicago  alone  2,000,000  cattle 
and  22,000,000  hogs  were  packed.  The  chief  market  for  the  numer- 
ous products  of  the  packing  establishments  was  in  the  manufacturing 
districts  of  the  East.  The  eastbound  rail  shipments  of  provisions 
from  Chicago  in  1900  averaged  about  20,000  tons  a  week. 

Cotton,  The  geographical  limits  of  the  cotton  belt  had  been  reached 
before  1860  and  consequently  there  was  no  further  extension,  but 
the  cotton  acreage  was  increased  from  about  13,000,000  acres  to 
more  than  30,000,000  acres  during  the  period.  Texas  in  1900  had 
over  7,000,000  acres  of  land  devoted  to  cotton  raising  and  seven  more 


INTERNAL   COMMERCE   OF  THE  UNITED   STATES  25 

of  the  thirteen  states  in  the  cotton  belt  each  had  an  acreage  of  more 
than  1,000,000.  The  chief  interior  cotton  markets  in  1898  were 
Houston,  St.  Louis,  Memphis,  Augusta,  Cincinnati,  Atlanta,  Little 
Rock  and  Shreveport.  The  city  of  Houston,  through  which  passed 
a  large  part  of  the  Texas  crops,  destined  for  export  from  Galveston, 
had  the  heaviest  receipts  amounting  to  1,800,000  bales.  St.  Louis 
and  Cincinnati  owed  their  prominence  to  their  position  as  natural 
gateways  through  which  cotton  passed  to  Northern  markets  from 
Texas  and  the  lower  valley  of  the  Mississippi.  Among  the  Southern 
seaports  New  Orleans  held  the  lead  in  cotton  receipts  until  1899, 
when  Galveston  took  first  place.  Together  these  two  cities  shipped 
nine-tenths  of  the  cotton  exported  by  the  way  of  the  Gulf  of  Mexico. 
On  the  Atlantic  coast  Savannah  held  the  lead  in  cotton  receipts. 
The  trade  of  Charleston  declined  somewhat  after  1880;  Norfolk  and 
Wilmington,  of  relatively  small  importance  before  the  war,  became 
large  markets  during  this  period,  the  former  ranking  next  to  Savan- 
nah after  1880. 

The  ''overland  movement^'  of  cotton  by  rail  to  the  North,  which 
began  in  1855,  developed  to  large  proportions  after  the  war  This 
movement  represented  the  results  of  the  efforts  of  the  railroads  to 
secure  a  share  of  the  traffic  that  had  formerly  belonged  entirely  to 
the  coasting  trade.  The  "overland"  traffic  originated  in  all  the  cotton 
states,  most  of  it  passing  through  St.  Louis  and  the  gateways  on 
the  Ohio  and  Potomac  rivers  to  North  Atlantic  States  to  be  sold  to 
Eastern  spinners  or  exported  to  Europe.  In  1899  the  all-rail  move- 
ment of  cotton  amounted  to  1,370,000  bales,  as  compared  to  a  coast- 
wise movement  of  2,019,153  bales. 

A  noteworthy  feature  of  the  cotton  trade  of  this  period  was  the 
increase  of  cotton  consumption  in  the  South.  After  1885  there  was 
a  rapid  expansion  of  cotton  manufacturing  in  several  Southern  States, 
and  in  1899  their  mills  used  1,400,000  bales  of  cotton,  only  a  third 
less  than  the  number  of  bales  consumed  in  Northern  mills.  The 
decline  of  cotton  receipts  at  Charleston  was  largely  due  to  the  growth 
of  cotton  manufacturing  in  South  Carolina,  whose  mills  were  con- 
suming more  than  one-half  of  the  annual  product  of  the  state  at 
the  close  of  the  century. 

Coal.  Previous  to  1860  practically  all  the  coal  shipped  from  the 
anthracite  districts  in  Pennsylvania  was  transported  to  Philadelphia 
and  New  York  where  it  was  consumed  or  carried  coastwise  to  points 
along  the  Atlantic  seaboard.    The  movement  to  Eastern  points  con- 


26  INTERNAL   COMMERCE   OF  THE  UNITED   STATES 

tinued  to  constitute  the  largest  part  of  the  anthracite  trade  after 
1860,  but  a  trade  toward  the  West  also  sprang  up.  The  chief  route 
for  this  traffic  was  by  canal  or  rail  to  Buffalo,  from  where  it  was  dis- 
tributed among  other  ports  on  the  Great  Lakes.  Another  important 
movement  was  to  Pittsburgh,  large  quantities  being  shipped  thither 
for  distribution  westward  by  rail. 

Until  the  early  sixties  the  production  of  bituminous  coal  was  less 
than  that  of  anthracite,  but  with  the  increase  of  manufacturing  the 
production  of  the  former  increased  rapidly  and  by  1900  the  output, 
amounting  to  190,000,000  tons,  was  nearly  four  times  the  output  of 
anthracite.  The  great  fields  of  Pennsylvania,  West  Virginia,  Mary- 
land and  Ohio  turned  out  much  more  than  one-half  of  the  bituminous 
coal  mined  during  this  period.  From  these  fields  there  were  large 
shipments  in  all  directions.  The  Chesapeake  and  Ohio  Canal  and 
the  southern  trunk  line  railroads  carried  a  heavy  tonnage  to  the  cities 
on  the  Atlantic  seaboard;  millions  of  tons  were  floated  down  the  Ohio 
River;  the  railroads  took  immense  quantities  westward  for  consump- 
tion among  the  Central  States,  a  large  part  of  it  being  distributed 
by  water  from  all  the  lake  ports  on  the  southern  shore  of  Lake  Erie. 
The  second  great  center  of  bituminous  coal  trade  was  in  the  fields 
of  Indiana,  Illinois,  Iowa,  Missouri  and  Kansas,  whence  the  numerous 
cities  of  that  district  drew  most  of  their  large  fuel  supplies.  The 
third  important  center  of  production,  which  was  developed  very 
rapidly  after  1885,  was  the  Alabama  and  Tennessee  field.  It  pro- 
vided fuel  for  the  growing  manufacturing  industries  of  the  south- 
eastern portion  of  the  country  and  competed  for  the  coal  trade  of 
points  on  the  lower  Mississippi. 

Iron  Ore,  Iron  and  Steel.  The  development  of  the  movement  of 
iron  ore  from  the  mines  around  Lake  Superior  to  the  furnaces  of  the 
Eastern  States  was  one  of  the  most  interesting  features  of  the  internal 
trade  of  the  United  States  during  this  entire  period.  This  trade 
grew  in  volume  from  less  than  1,000,000  tons  in  1870  to  18,000,000 
tons  in  1899,  the  shipments  during  the  latter  year  comprising  two- 
thirds  of  the  total  iron  ore  production  of  the  whole  country.  Prac- 
tically the  entire  traffic  went  by  lake  vessels  to  ports  on  Lake  Erie 
and  Lake  Michigan  whence  it  was  taken  by  rail  to  the  blast  furnaces 
of  Pennsylvania,  Ohio,  New  York  and  Illinois. 

No  other  industry  in  the  United  States  had  a  more  remarkable 
growth  after  1860  than  the  iron  and  steel  industry.  The  production 
of  pig  iron  in  1899  was  nearly  15,000,000  tons,  and  of  crude  steel 


INTERNAL   COMMERCE   OF  THE  UNITED   STATES  27 

almost  11,000,000  tons.  Pennsylvania  contributed  about  one-half 
of  the  entire  output  of  both  pig  iron  and  steel  during  the  forty  years, 
Ohio  ranking  second.  The  pig  iron  industry  began  to  expand  rapidly 
in  Alabama  and  Illinois  in  the  early  eighties,  and  by  1900  the  output 
of  these  two  states  constituted  a  fifth  of  the  total  product.  The  im- 
mense output  of  iron  and  steel  was  distributed  everyivhere  throughout 
the  country.  A  large  part  of  it  was  used  in  building  the  railroads  and 
the  remainder  was  utilized  as  the  raw  material  for  the  manufacture 
of  a  gieat  variety  of  iron  and  steel  products  that  were  used  in  all 
branches  of  industry. 

Lumber.  The  forests  of  the  United  States  were  subjected  to  a 
rapid  and  often  wasteful  exploitation  during  these  years.  Extensive 
building  operations,  the  construction  and  maintenance  of  an  enor- 
mous railway  mileage  and  the  growth  of  manufacturing  created  a 
heavy  demand  for  timber,  and  by  1900  the  annual  cut  amounted  to 
35,000,000,000  feet.  The  northeastern  group  of  states  which  had 
formed  the  chief  source  of  lumber  supply  before  1860,  lost  precedence 
by  1880  to  the  lake  states,  Michigan,  Wisconsin  and  Minnesota. 
The  tremendous  consumption  of  timber  throughout  the  country 
rapidly  depleted  the  supply  in  this  district  and  by  1900  the  yellow 
pine  of  the  South  was  being  heavily  drawn  upon,  forming  a  fourth 
of  the  production  of  the  country.  The  timber  lands  of  the  Pacific 
coast  contributed  more  than  2,000,000,000  feet  a  year  after  1890, 
and  the  shipments  of  lumber  and  shingles  from  this  region  to  the 
interior  were  beginning  to  take  on  very  large  proportions. 

Manufactures.  In  1859  the  New  England  and  Middle  Atlantic 
States  produced  nearly  three-fourths  of  the  total  manufactured 
products  of  the  United  States,  and  these  two  groups  together  with 
the  Central  States  reported  more  than  80  per  cent  of  the  product  of 
manufactures  of  each  census  year  thereafter.  In  general,  it  may  be 
said  that  the  rest  of  the  country  was  dependent  upon  these  sections 
for  its  manufactured  goods.  The  fact  that  over  one-half  of  the  prod- 
uct of  1899  came  from  five  states.  New  York,  Pennsylvania,  Illinois, 
Massachusetts  and  Ohio,  serves  to  designate  still  more  clearly  the 
chief  centers  of  trade  in  manufactured  goods.  Of  the  fifteen  leading 
manufacturing  cities  in  1899,  twelve  were  located  east  of  the  Missis- 
sippi River  and  two  were  situated  on  its  west  bank.  New  York 
City  alone  produced  in  1899  one-tenth  of  all  the  manufactures  of 
the  country  and  Chicago  and  Philadelphia  together  produced  another 
tenth.    The  localization  of  many  industries  within  the  manufac- 


28  INTERNAL  COMMERCE   OF  THE   UNITED   STATES 

turing  belt  itself  was  an  important  factor  in  determining  the  course  of 
internal  trade  between  the  manufacturing  states  and  the  rest  of  the 
country  and  among  the  manufacturing  states  themselves,  which  were 
the  largest  consumers  as  well  as  the  largest  producers  of  manufac- 
tured goods.  The  increase  in  the  value  of  the  products  of  manufac- 
tures from  $2,000,000,000  in  1859  to  $13,000,000,000  in  1899  gives 
an  idea  of  the  expansion  in  the  trade  in  manufactured  commodities, 
the  details  of  which  it  is  impossible  here  to  consider. 

There  were  no  other  articles  the  movements  of  which  equalled  in 
importance  those  of  the  various  commodities  discussed  above,  but 
there  were  many  that  contributed  a  tonnage  of  large  volume  and  value 
to  internal  trade.  Dairy  products,  poultry  and  eggs,  wool,  hay, 
sugar,  tobacco,  fruits  and  vegetables  from  the  farms,  petroleum, 
gas,  copper,  stone  and  many  other  valuable  mineral  products,  and 
the  large  annual  quantity  of  imports  of  food  products,  manufactures 
and  raw  materials  entering  the  seaports  to  be  distributed  among 
interior  markets  helped  to  swell  the  volume  of  traffic  that  moved 
from  place  to  place  within  the  country. 

Conclusion.  A  most  interesting  and  significant  feature  of  the  his- 
tory of  the  United  States  during  this  period  was  the  transition  in  the 
character  of  the  economic  problems  of  the  country.  Until  the  time 
of  the  Civil  War  its  chief  problems  had  been  those  of  securing  the 
means  to  develop  its  resources,  of  acquiring  the  facilities  for  trans- 
porting its  products  from  place  to  place,  and  of  providing  markets 
in  which  its  products  could  be  sold.  As  capital,  population  and 
transportation  facilities  were  provided  to  exploit  the  latent  wealth 
of  the  continent  it  was  found  that  out  of  their  presence  grew  far 
larger  and  more  vital  problems  than  their  absence  had  ever  created. 
The  economic  difficulties  of  the  nation  after  the  Civil  War  arose 
chiefly  because  of  the  existence  of  the  things  which  before  1860  it 
was  a  question  of  acquiring. 

In  no  instance  was  this  general  proposition  better  demonstrated 
than  in  the  railroad  problem.  For  nearly  sixty  years  of  the  nine- 
teenth century  the  chief  obstacle  to  internal  trade  had  been  the  lack 
of  the  means  of  transportation.  To  overcome  this  difficulty  the 
states  had  first  built  their  own  canals  and  railroads.  Many  of  the 
state  enterprises  failing  because  of  weak  administration,  the  states 
had  surrendered  the  management  of  railroads  to  private  corporations, 
but  the  public  continued  to  share  in  railroad  construction  through 
numerous  grants  of  aid  by  federal,  state  and  local  governments. 


INTERNAL   COMMERCE   OF  THE   UNITED   STATES  2& 

For  a  number  of  years  almost  the  only  activity  of  the  public  in  regard 
to  railroads  was  to  foster  and  protect  the  interests  of  the  railroad 
companies.  In  the  seventies  the  public  gradually  came  to  a  realiza- 
tion of  the  fact  that  the  railroad  companies  were  displaying  a  lamen- 
table lack  of  regard  for  the  interests  of  the  public.  Persons  and 
communities  found  themselves  entirely  at  the  mercy  of  railroad  cor- 
porations, which,  by  vicious  discriminations,  built  up  and  destroyed 
where  they  chose,  and  even  endeavored  to  control  arbitrarily  the 
economic  future  of  entire  groups  of  states  regardless  of  their  natural 
advantages  or  the  choice  of  their  people.  And  not  only  did  the  rail- 
road companies  themselves  become  a  source  of  danger,  but  they  were 
instrumental  in  the  creation  and  development  of  great  industrial 
combinations,  which  were  equally  indifferent  to  the  welfare  of  the 
general  public  The  transportation  problem  of  the  United  States 
was  no  longer  that  of  providing  facilities,  but  of  controlling  and  regu- 
lating the  existing  facilities  in  such  a  manner  that  reasonable  rates 
and  services  would  be  given  to  the  public  which  had  entrusted  the 
business  of  transportation  to  private  agencies.  The  demand  for 
relief  was  first  voiced  in  state  legislation.  The  states  being  powerless 
to  regulate  interstate  trade,  the  national  government  found  it  neces- 
sary to  act,  and,  in  1887,  the  Interstate  Commerce  Law  was  passed, 
having  for  its  chief  purpose  the  prevention  of  unjust  discrimination. 
As  a  regulative  measure  the  law  proved  inadequate,  its  most  impor- 
tant provisions  being  emasculated  by  court  decisions,  and  the  century 
ended  with  effective  railway  regulation  unaccomplished. 

No  less  pressing  than  the  problem  of  regulating  railroads,  over 
which  the  internal  commerce  of  the  nation  was  carried  on,  was  the 
question  of  regulating  the  great  industrial  combinations  through 
which  a  large  part  of  the  buying  and  selling  of  the  products  of  the 
country  was  controlled.  The  unfair  advantages  secured  by  large 
combinations  because  of  their  abundance  of  capital  and  the  dis- 
criminating favors  of  railroads  enabled  them  often  to  throttle  com- 
petition and  to  establish  monopolies  that  were  a  menace  to  the 
public.  This  situation  likewise  called  forth  federal  legislative  meas- 
ures intended  to  prevent  the  monopolization  of  trade.  Previous  to 
1900,  however,  but  little  application  of  the  law  was  made. 

To  the  tariff  and  to  the  currency  the  nation  owed  its  most  bitter 
political  struggles  after  the  reconstruction  of  the  Union  was  accom- 
plished. The  net  result  of  a  half  dozen  efforts  to  modify  the  tariff 
was  the  existence,  at  the  end  of  a  century,  of  a  tariff  law  in  which  the 


30  INTERNAL   COMMERCE   OF  THE   UNITED   STATES 

general  average  of  duties  was  10  per  cent  higher  than  the  average  at 
the  close  of  the  Civil  War.  The  currency  system  of  the  nation,  with 
the  exception  of  the  improvement  in  banking,  became  worse  instead 
of  better  after  the  war,  the  chief  trouble  arising  because  of  the  adop- 
tion of  measures  intended  to  satisfy  insistent  demands  for  a  greater 
volume  of  money,  without  making  provision  for  its  retirement  when 
business  conditions  were  such  as  to  warrant  a  contraction  of  circula- 
tion. A  quarter  of  a  century  of  struggle  finally  ended  in  the  over- 
throw of  the  advocates  of  the  unlimited  issue  of  cheap  money,  but 
no  attempt  was  made  before  1900  to  remedy  the  inelasticity  of  the 
national  currency  or  to  check  the  tendency  toward  a  concentration 
of  the  control  of  credit  in  a  few  financial  centers.  In  1873  and  in  1893 
the  country  suffered  from  money  panics,  the  latter  one  being  due 
almost  entirely  to  unwise  financial  measures  that  had  virtually 
bankrupted  the  government  and  destroyed  confidence  in  the  money 
it  issued. 

The  end  of  the  century  was  reached  with  only  a  little  headway 
made  in  the  solution  of  the  most  vital  economic  problems.  In  strik- 
ing contrast  to  the  '' golden  age"  of  American  history,  noted  for  the 
absence  of  both  pauperism  and  great  riches,  this  period  saw  the  devel- 
opment of  the  extremes  of  poverty  and  wealth,  and,  furthermore, 
an  ever-growing  tendency  toward  the  concentration  of  the  national 
wealth  under  the  control  of  a  few  powerful  interests.  The  disregard 
which  too  many  of  these  interests  evinced  for  the  welfare  of  the  gen- 
eral public  and  the  power  which  they  possessed  to  thwart  the  efforts 
of  the  public  to  protect  itself  created  most  of  the  great  questions 
which  confronted  the  nation — questions  of  such  serious  nature  as  to 
dim  the  record  of  achievement  and  material  progress  from  1860  to 
1900. 

However  there  was  ample  evidence  that  the  national  consciousness 
was  beginning  to  take  cognizance  of  much  of  the  prevailing  malad- 
justment and  was  awakening  to  a  sense  of  duty — long  undone.  A 
growing  sense  of  personal  responsibility  both  on  the  part  of  those  who 
suffered  from  existing  conditions  and  on  the  part  of  those  who  prof- 
ited by  them  was  paving  the  way  for  a  speedy  application  and  a 
willing  acceptance  of  a  system  of  conservative  public  regulation  of 
private  business  in  which  careful  consideration  would  be  given  to  the 
rights  of  all  persons.  In  the  intelligent  realization  of  the  meaning  of 
the  existing  situation  lay  the  basis  of  a  clear  perception  of  the  proper 
steps  to  be  taken  and  a  strong  hope  for  the  immediate  future. 


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